The pound should now steady against the deutschmark, and may even rise slightly, Irish analysts said last night. Reacting to Mr Brown's remarks, they said sterling was likely to climb against the deutschmark, with the pound in its slipstream. "We could expect a modest rebound in sterling," said Mr Jim O'Leary, chief economist at Davy Stockbrokers. "The pound would also rise against the deutschmark, but might not be dragged up pfennig for pfennig with sterling."

"The pound is now very close to fair value," said Mr Jim Power, chief economist at Bank of Ireland.